Be Cautious Adding Statements to Your Credit History

I want to add a statement as to the reason of my bad credit from about seven years ago. How do I do it?

– ALC

Dear ALC,

You can add such a statement, but I do not recommend it.

There are two kinds of statements that can request to be added to your credit report. The first is an account-specific dispute, which is linked to a specific entry in your credit history. The second is a general statement that applies to multiple entries in your credit history or to the history as a whole. That is what you are describing.

Account-specific statements are deleted at the same time as the account. General statements, however, remain two years. In your case this is important because your negative accounts will be deleted before the general statement.

After the negative information is removed, the statement will only alert lenders that you had credit problems in the past that they might want to know more about.

The last thing you want to hear from your lender is, “I don’t see any late payments in your credit report, but the statement you added says you had some problems in the past, can you tell me more about that?”

Account specific statements also can take one of two forms.

The first, which you are describing, is sometimes referred to as a “statement of excuse.” The classic example is, “My payments were late because I went on vacation and forgot to mail the checks.” That type of excuse has led to the nickname for any statement explaining why payments were late or debts were not paid as agreed.

While you may have good reasons, the cold fact is that explaining why you were late will almost certainly have no positive impact on lenders’ decisions when you apply for a loan.

On the other hand, when it is appropriate, I do encourage you to add the second type of statement, referred to as a “statement of dispute.”

Most commonly account specific, a statement of dispute presents your side of the story when you disagree with the reported status of an account. For instance if you dispute an account as “never late,” but the lender says the information is correct, you can add a statement telling new lenders that you disagree with the status of the account and how it is being reported by the lender.

Statements of dispute are helpful because they alert lenders to your disagreement and in some instances can give you an opportunity to provide documentation or other proof so that your application can move forward.

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